They're just holding out for more money. As the construction progresses, there's going to be a point where the construction company will have so much invested in the project. Then they'll have to pay whatever the homeowner wants.

This is Communist China? They cleared everything for the olympics, flooded villages, cities and historcal sites for Hydroelectric power/ flood control. They let this one little building stay? Something sure isn't right here. That government will make you disappear at the slightest bit of giving them trouble.